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> Obviously if sharing songs via violating copyright weren't an option, listeners would happily pay a little more for Pandora premium or endure a few more commercials.

I don't think that's obvious, I think it's an empirical question. With N subscribers, Pandora currently makes $36 * N per year. If they raise the cost to $50, they'll make $50 * (N - x), where X is the number of subscribers they'd loose.

Of course, all the profit is basically split between the licensors. Pandora currently keeps nothing.

You are suggesting that 50 * (N-x) is "obviously" bigger than 36 * N, but I would suspect that Pandora has already tested it, and $36 provides the maximum possible revenue. If they haven't tested that, they are truly incompetent.

The Pink Floyd article mentions their IPO, but doling out IPO money to licensors is a temporary solution, and probably one Wall Street wouldn't take particularly kindly to. So the choice really is "the current licensing terms, or $0".




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